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World weighs up merits of China’s ‘One Belt One Road’ vision

May 15, 2017 – The problem governments have in assessing the “One Belt, One Road” strategy put forward by global heavyweight China is that on the surface it’s hard to argue against it.

While countries such as India, which has publicly criticized parts of Beijing’s infrastructure plan, and Australia, which has quietly resisted setting up any formal links at this stage, may have valid strategic concerns, the world needs more infrastructure. That is particularly the case in Central Asia, far west China and Southeast Asia, all key corridors in China’s revival of the old Silk Road and plan to expand maritime trading routes.

International Monetary Fund managing director Christine Lagarde said it herself at the opening of the OBOR summit in Beijing on Sunday. The two-day summit, which wound up on Monday, was designed to showcase President Xi Jinping’s signature foreign policy.

“High quality infrastructure could help close the developing-country infrastructure gap of about $US1.5 trillion per year, lift potential growth and raise the incomes of millions of people,” Lagarde said.

“Think of new ports, roads and power grids that allow developing countries to better connect with global supply chains. And think of improved roads in rural areas that can boost productivity, school enrolment and access to health services,” she said.

As the US steps back from global leadership in development assistance and the promotion of free trade, China appears willing to step in and fill the void. And that’s hard not to support. Developing Asia alone needs to spend $US26 trillion by 2030 to maintain growth, eradicate poverty and respond to climate change, according to the Asian Development Bank.

The dilemma for governments is that China’s motives are not all altruistic or even economic. There is no doubt the world’s most populous country is looking to expand its sphere of influence in the region and shake up the existing international order.

At the same time, it isn’t surprising the world’s second biggest economy is looking to open new trade routes, have more diplomatic influence or explore its strategic options.

However, governments need to ask who will control the ports, roads and power grids China is helping to build and what will Beijing seek in return for its financial support.

And it is important to note Ms Lagarde referred to “high quality infrastructure”, which will require discipline and coordination in the allocation of funds.

There is a degree of uncertainty surrounding OBOR which begets a degree of wariness, even among China’s partners.

China claims 65 countries are participating in OBOR, which was first flagged as a strategy by Mr Xi in 2013. However, just 29 country leaders convened in Beijing for the inaugural summit. And as Quartz pointed out in an article last week, nine of those were from outside the OBOR family. This means 44 heads of state from participating countries chose not to attend, leaving it to ministers or government officials.

The US and Japan made last-minute decisions to send delegations and Australia was represented by Trade Minister Steve Ciobo and Victorian Premier Daniel Andrews. On the sidelines of the summit, Mr Ciobo told journalists on Sunday “we see opportunities for collaboration, but we take decisions about initiatives in Australia on the basis of what in Australia’s national interest”.

British Chancellor Philip Hammond was more effusive in his support for OBOR, declaring: “Britain, lying at the Western end of the Belt and Road, is a natural partner in this endeavour.”
India’s government, meanwhile, is concerned about the China-Pakistan Economic Corridor, parts of which go through Pakistan-controlled Kashmir. It cautioned in a statement ahead of the summit that projects “must be pursued in a manner that respects sovereignty and territorial integrity”.

This strategic wariness, particularly in India, is set to persist at least in OBOR’s early stages. With more international coordination and involvement from the ADB, the IMF and the World Bank, China’s partners may become more comfortable over time.